On Monday, in early Asia trading hours, the crypto market took a gut punch.
The total market capitalization has plunged by 12.5%, and this is the first time since mid-February that the market cap has dropped below the $2 trillion level.
Fed’s rate decisions started the speculation, or there is something else?
Bitcoin, fell way below the $60,000 mark, trading at $53,300 in the time of writing. It’s not alone, Ethereum, the second-largest cryptocurrency, saw a bigger decline of 21.2% during the same period, now priced around $2,300.
Ethereum’s sharp drop has impacted its entire ecosystem, the maximum gas fee soared to 710 gwei, with the current average at 350 gwei.
Crypto journalist Colin Wu pointed out that further declines in Ethereum’s price could lead to large-scale liquidations in DeFi protocols.
“If Ethereum falls to $1,950, $92.2 million of crypto assets in DeFi protocols would be liquidated; at $1,790, $271 million in DeFi assets would be liquidated.”
Nine figure losses so far
The broader impact of the market drop is clear from the liquidation figures, because over $800 million was liquidated in the last 24 hours, with $699.45 million from long positions and $100.56 million from short positions.
The largest single order liquidation occurred on Huobi with a BTC-USD pairing valued at $27 million.
The famous sentiment indicator, the fear and greed index for the crypto market also plummeted to 26, reaching the zone of fear.
This metric reflects a growing bearish sentiment across the market, what is not surprisig at all.
Bitcoin became mainstream, but now it rely on macroeconomics?
Many industry experts thinks the recent drop is likely due to macroeconomic events.
The Bank of Japan’s unexpected hawkish stance last week, combined with the US Federal Reserve’s cautious approach to rate cuts, has increased market’s uncertainty.
Some crypto traders believe that the dire situation could force the Fed to make an emergency rate cut in 2024.
Polymarket, the popular predicton market shows that the odds of a Fed emergency rate cut have increased by 11% in the last 24 hours.
